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Australia rejects application to build world's largest green hydrogen project

Highlights

Decision hinders 26 GW solar, wind project

Still targets ammonia exports from 2027

Consortium targets financial close by 2025

The Australian government has rejected an application to build what would be the world's largest renewable hydrogen and ammonia plant, the 26 GW Asian Renewable Energy Hub in Western Australia.

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Australia's Minister for the Environment told the consortium developing the project that an environmental referral would not proceed in its current form, the AREH consortium said in an email June 22.

"We are now working to understand the minister's concerns, and will engage further with the minister and her department as we continue to work on the detailed design and engineering aspects of the project," it said.

The Australian government had granted the AREH "Major Project Status" in October 2020, with the Western Australian government giving environmental clearance for the first 15 GW phase of the project.

InterContinental Energy and its partners -- CWP Global, Pathway Investments (Macquarie) and wind turbine producer Vestas -- plan to build a 26 GW solar and wind project in East Pilbara, Western Australia, to produce hydrogen via electrolysis, and convert the hydrogen to ammonia for export.

The project would produce around 1.8 million mt/year of hydrogen and up to 10 million mt/year of ammonia, with exports targeted at Japanese and South Korean utilities. AREH also said the power and gas produced could be used to decarbonize mining activities in Pilbara, where the project is based.

The consortium plans to continue with the project, and is targeting financial close in 2025, with first production and exports expected in 2027-28. It is the largest development of its kind anywhere in the world.

Australia's Clean Energy Council said the project was a "transformative economic opportunity for Australia."

"It is the Clean Energy Council's understanding that the Federal Minister for the Environment has rejected the expanded proposal for this project prior to the completion of detailed environmental studies," it said in a statement.

It said it had asked the government for clarification on the "well-established processes" and its treatment of permitting for non-renewable projects, and expected the government to work with the consortium to give guidance on how to address concerns over the environmental impact of the project.

The price of hydrogen in Japan, a market Australia is targeting for exports, was assessed by S&P Global Platts at $4.51/kg on June 21, on a cost of production basis for alkaline electrolysis (including capex).

InterContinental Energy is targeting hydrogen production costs of below $2/kg on a full project basis.

The company plans to initially target growing demand for ammonia from the Japanese and South Korean utility and fertilizer sectors, as companies switch to greener fuel supplies to meet net-zero carbon emissions targets in the coming years.

Utility companies in the region plan to switch from burning coal to ammonia, blending increasing volumes of the renewable gas into the mix, InterContinental Energy's chief strategy officer, Sacha Thacker, told S&P Global Platts in an interview in May.